Non-geographical Factors Needed for Industries

Many factors influence the establishment of an industry in a particular region or location. Apart from geographical factors such as land, raw material resource, energy supply, etc., a range of non-geographical factors also determines the location and presence of industries in a region. These factors include a source of capital, labor supply, market demand, and many other factors. Non-geographical factors can be related to that region’s economic, social, or political environment that generates some favorable conditions for the establishment and functioning of the industries. In general, industrial establishments tend to locate where all the favorable factors of industrial activities are either available or can be arranged conveniently at a lower cost. The location decisions of the industry have been generally based on demand, market, and revenue factors which often are affected by several non-geographical factors.

Non-Geographical Factors for Industries

Non-Geographical Factors that Influence Presence of Industries:

The non-geographical factors that influence the location and presence of industries include various financial, regulatory, and human resource factors that determine the cost of production and distribution, eventually affecting the business’s efficiency and profitability. Some of the critical factors are discussed as follows:

1. Capital:

Capital or investment is a major deciding factor for the industry. Source of capital and inflow of funds are required for any business, which is generally easy to avail in large cities. Hence, industrialists tend to locate their business around these cities.  

2. Government Policies:

Government policies also influence industrial location and operations. The government sometimes sets restrictions or regulations regarding establishing specific industries in particular areas to reduce regional disparities, control excessive pollution, and avoid clustering industries around big cities. The government also provides incentives like subsidized power, tax benefits, and other infrastructure facilities to encourage the establishment of industries in certain regions. Various small-scale industry establishments have grown up even in backward areas taking advantage of government policies. 

3. Banking and Insurance Facilities:

The areas with better banking facilities are better suited for establishing industries. In many cases, investors seek a loan to start the industries. Monetary transactions are happening regularly, which is possible through banking facilities. Again, under changing economic scenarios and local conditions, enterprises look for insurance facilities to support their industrial activities under any unfavorable circumstance. 

4. Availability of Labor:

An industrial setup can function effectively with the availability of cheap labor in the area of operation of the industry. Some industries involve manual activities which require a large labor force. The availability of labor suitable for the work at a lower cost is a favorable condition for industrial setup and operations. 

5. Political Situation:

Political stability and harmony in a region also favor the establishment of industry in a region. But disturbed political situations discourage industries from starting their operation in a particular area. Political parties’ protests and labor unrest often force industrialists to shift from the planned business establishment area to other locations. 

6. Industrial Inertia:

Often industries don’t tend to relocate to new areas even with the current region’s changing socio-economic conditions, which create some challenges. It may be observed that costs associated with relocating fixed capital assets and finding labor in the new location outweigh the costs of adapting to the changing conditions of a current location. In such cases, the industry avoids relocating facilities even under the changing circumstances following industrial inertia.

7. Possibility of Future Expansion:

All industries think of long-term goals and explore possibilities for the future expansion of business. The opportunities available for possible future development and growth with technology upgrades are deciding factors for the location and presence of an industry in a region. 

8. Size of Industrial Units:

The size of an industrial unit also can influence choosing a location because the size of industrial units may require the acquisition of larger land areas affecting the population and natural habitat located in the proximity. There may be complexities involved in relocating local communities and handling environmental issues.

9. External Economic Factors:

External economic factors also influence the location of industries. Changes in external economies occur as specialized subsidiary activities develop in a region when a particular industry is localized. External economies play a significant role when many industrial units are located nearby. 

Important Facts Related to this Issue:

• In a developing country like India, the Iron and Steel industry has taken advantage of cheap labor, raw material, and the demanding market.
• Bhadravati and Vijay Nagar in Karnataka, Visakhapatnam in Andhra Pradesh, and Salem in Tamil Nadu are essential steel plants established utilizing local resources.
• The densely populated areas like Gujarat and Maharashtra provide skilled and semi-skilled labor, favorable factors for industries.
• Ahmedabad was the second-largest textile city and was referred to as the ‘Manchester of India‘. 

Examples of Non-Geographical Factors:

There is a trend of the establishment of many industries in an area where they will get the advantage of resources that can be geographical and non-geographical. Often non-geographical factors become major deciding factors for business establishments. The history of the Indian cotton textile industry in and around Bombay in the early days was mainly due to wealthy and enterprising Parsi and Bhatia merchants who supplied vast financial resources. Another influencing factor for the cotton industry was Bombay’s cheap and excellent transportation network. Government policies introduced during the five-year plans greatly influence the establishment and growth of industries in various parts of India. 

The iron and steel plants, fertilizers factories, engineering firms, oil refineries, power projects, and construction industries have come up in the new planning era of independent India. In south India, the emergence of suitable industries around the public sector plants and their expansion to backward areas result from government policies and initiatives. The locations of the oil refinery at Mathura and the fertilizer plant at Jagdishpur are the results of government policies applicable to those areas.

Conclusion:

The location of an industry depends on various factors, both geographic and non-geographical factors. In the present scenario, the availability of alternative raw materials, access to modern technology, power supply over more expansive areas, and the increasing mobility of labor have reduced the influence of geographical factors and increased the effect of non-geographical factors on the location of industries.